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Filing Chapter 7: Understanding the New Laws

As of 2005, new bankruptcy laws went into place to keep those that have been filing Chapter 7 abusively from doing so. This law, called the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 is one that is quite comprehensive. It provides for several restrictions that will require those that are considering filing bankruptcy to follow before being able to have their bankruptcy discharged. Is this a necessary change? Is it a helpful one? No matter what the answers to those questions are, the fact is that it is now harder than ever to file Chapter 7.

What The New Law Says

There are several things that are now taken into effect in regards to filing Chapter 7 under this new law. Here are some points that are important to know about.

• A variety of new deadlines is included. If these new deadlines are missed, your bankruptcy will not go through. Penalties for refilling will be higher and harder to work through.

• A test is provided by your attorney that will determine if you even are allowed to file bankruptcy. This will decide if you can file Chapter 7 or Chapter 13 and is called a means test. More people will be required to file under Chapter 13 which will require you to have your debts restructured so that you still have to pay them back, just at a lower rate.

• Your assets are likely to be valued higher than before and this includes furniture, cars, and other assets you have.

• There are also laws in place that require residency requirements as some individuals were seeking to use the laws of one area over another if they were more favorable to them.

• There are penalties and fees for trying to re-file. Although it was easy to do this in prior years, it is now going to be seriously challenging to do so.

• The judges are allows to provide for up to 20% in reduction to the debt is the creditors will not work with consumer credit counseling companies to help you to relieve your debt.

• There are also protections in the new law that allows for your college savings plans and your retirement funds to remain untouched by the filing of Chapter 7.

With all of these new laws in place, it is even more important to contact a skilled attorney when it comes to filing Chapter 7.